SpaceX debut draws a crowd, but few recent hot IPOs outpace the market
Key takeaways
- A Reuters analysis of the 50 IPOs with the highest valuations in the past five years shows that investors would have been better off buying an S&P 500 index fund about three-quarters of the time.
- An investor who bought each of the IPOs tracked by Reuters would be up an average of 27% through May 21.
- Historical returns for investors buying during the frenzied first day of trading of a stock fare even worse, the analysis showed.
Why this matters: local context for readers following news across Pakistan and the region.
Add ARY News on Google AAResize Wall Street is abuzz with next month’s expected blockbuster debut of Elon Musk’s rocket and satellite maker Space X, but few of the biggest IPOs in recent years have paid off for investors who bought in when the deals came to market.
A Reuters analysis of the 50 IPOs with the highest valuations in the past five years shows that investors would have been better off buying an S&P 500 index fund about three-quarters of the time. The data underscores the difficulty of finding bargains among companies whose valuations have often surged long before the stock’s debut.
An investor who bought each of the IPOs tracked by Reuters would be up an average of 27% through May 21. That compares to an average gain of 53% in the S&P 500 over those same periods. The analysis assumes the buyer would be able to purchase shares at the IPO price – often not possible for a retail investor – or simply buy the broad-market S&P.